I’ve been thinking about channels a lot recently – where potential buyers/users come from, what were they doing when the ‘showed up’ and how did they even start thinking about making a purchase? When it comes to practical execution I find that understanding about purchase intent is a great way to cut the chase and efficiently decide on marketing actions that...

Lots of good content all of a sudden on both mobile and online marketing. Here are some good ones: Triggered emails have HUGE open and click throughs: Online Media Daily reports on a study that shows that triggered emails (emails that are sent when a user takes a specific action, such as abandons a shopping cart, have a much higher click through than ordinary marketing...

I’ve been thinking about channels a lot recently – where potential buyers/users come from, what were they doing when the ‘showed up’ and how did they even start thinking about making a purchase? When it comes to practical execution I find that understanding about purchase intent is a great way to cut the chase and efficiently decide on marketing actions that will result in either sales or learnings with data on what didn’t work.

By purchase intent, I mean the moment when a potential customer expresses interest in paying for a solution to a problem.

For a startup, there are at least two critical moments when you want to ‘exploit’ a potential customer’s purchase intent: a) when the person is forming purchase intent and b) when a person is expressing purchase intent. (I don’t like the word exploit, but it gets the point across.)

The funny thing is that now that I’ve run marketing at two different startups, I’ve found that the exact same channel could be in the formation phase for one company and at the expression phase for another.

For example, at my last company national press would drive a large number of new users into our purchasing funnel. Small business owners would read about us on a respected news site and decide to give the service a try, with many of them putting down their credit cards to begin using the service. Choosing to read an article about, say scanning receipts, shows that a person is already interested in the solution; nobody reads articles on b2b solutions for fun! Formation is triggered when the title the of the article is read “hey I have this problem,” and leads to purchase expression when the reader clicks to OfficeDrop’s website “this sounds like a great solution!”

At Boundless, national press does drive a lot of visits, but doesn’t covert in the same way. This is because students don’t make textbook buying decisions based off of news articles; students express intent during specific times of the school year. While they may be intrigued by an article on a way to save money with Boundless textbook alternatives, reading the article only helps them form purchase intent. It doesn’t directly lead to the expression of purchase. Instead, they (hopefully) remember to check out Boundless at the start of the next semester when they are looking for books. So news articles help the potential user form the desire to try out our solution when the time is right, but won’t directly lead to purchasing.

Supporting both sides of purchase intent is important. The Boundless press helps with branding (hard to measure) but also drives increased on page and in funnel conversion (by providing third party proof of quality.) So we can quantify the benefit beyond the hard to measure branding and awareness. However, my main point is that the exact same channel influenced different parts of purchase intent for two different startups. And if you don’t measure your channels you’ll never know if you are positively impacting anything, so careful tracking is critical to success.

Lots of good content all of a sudden on both mobile and online marketing. Here are some good ones:

Triggered emails have HUGE open and click throughs: Online Media Daily reports on a study that shows that triggered emails (emails that are sent when a user takes a specific action, such as abandons a shopping cart, have a much higher click through than ordinary marketing emails.”Triggered open rates performed at 75.1% higher”

Yup, people are really opening emails on mobile devices these days; Returnpath “reports that mobile open share has increased 300% since 2010, and shows no sign of slowing, with four out of 10 emails sent being read on a mobile device.” Read more.

“The iPhone and Android smartphones remain the most popular smartphone platforms for messaging. iOS users account for more than half of those opting into MMS and text-messaging campaigns, compared to 34% coming through Android phones. Those levels are up from 23.6%, and 16%, respectively, in April. BlackBerry accounted for 7% of opt-in messaging.” Read more.

Recently Prasad Thammineni, Healy Jones (me), & one of our investors, David Mars, recent participated on a panel at Wharton reunion talking about how we worked together to grow OfficeDrop. Tyler Wry, Wharton professor, lead the discussion and recently posted an article on the panel for Wharton Magazine.

Tyler’s post, entitled “Teaching Lean Entrepreneurs,” dives into how a business school education can be an asset when running a lean startup. Tyler defines the lean startup, then goes into how OfficeDrop combined some of the theories we learned about at Wharton with the practices of running a lean startup.

Often times business school/MBAs are made fun of by startuppers; this is a somewhat fair stereotype – A lot of times MBAs think that they will join a startup and the the “strategy” person or run a bunch of analysis in Excel. Of course, we all know that startups need doers! But the MBA can be helpful as it provides frameworks that can be used to quickly make sense of a rapidly changing competitive environment that startups face. Also, things like pricing, positioning, etc are all classes taught at business school, and a good school will at least help you be prepared to know what you don’t know so you can launch.

Tyler had an interesting conclusion to his piece, and one that I agree with. He said, “For me, this drove home the point that entrepreneurship isn’t really that different than any other area of business—training matters. Anyone can start a company, and many scientists and entrepreneurs who don’t know the first thing about business become successful entrepreneurs. On average, though, the startups that are most likely to succeed have some serious business chops behind them.”

I’ve used this decoy pricing tactic on OfficeDrop’s pricing pages for a while. In particular, our digital filing pricing page has an expensive plan that has nicely increased overall conversion on the page.

The main result of this decoy is increased conversion on the page. In otherwords, a higher number & percent of visitors to the page pick a plan and become an OfficeDrop user. It hasn’t really changed the MIX of plans (very few people pick the expensive plan and the same % of people pick the other plans). But I consider the decoy plan a success because it’s getting more people into our funnel.

Conversion Rate w/Decoy Pricing

You can see the pop here when we added a decoy pricing plan to our standard digital filing pricing page. This chart is the % of visitors who visited the page and then signed up for a plan. I.e. the conversion rate of the page. Note that there is a little dip in the beginning that has nothing to do with pricing; it’s a data error. The way to look at this w/o the data error is the two little peaks on the left are close to the pre-decoy conversion rate average; the hump on the rigth is the new average post addition of the decoy pricing plan.

What the Decoy Pricing Plan Looks Like

The decoy pricing is the “ScanPro” “ScanFive” plan on the right. (Thanks for the typo catch Pete!)

Decoy Pricing Plan

It’s designed to be expensive and to make clear that we’ve got the ability to support additional users in the plans… it’s not really clicked that often.

Anyways, check out the post I linked to above. You’ll find it very solid, and it explains why a decoy plan works.

Lincoln Murphy, the well known SaaS Marketing guy, got pretty upset at a recent TechCrunch piece on the freemium pricing strategy that posted this weekend. Lincoln says (I’m on his email newsletter list; it’s pretty good): “In a nutshell the Complete Guide to Freemium on TechCrunch is a post by someone who got lucky enough to get their post accepted so he can get a backlink to his site from TechCrunch and where he takes the results of studies and some words from high-profile VCs and weaves it together into a post for the TMZ of the tech industry.”

What is Freemium?

However, I don’t think it’s the Ultimate Guide to what is a actually a pretty complicated pricing strategy. I happen to disagree with the author’s ideas that a time based free trial = freemium. I can’t tell if my disagreement is a big deal or not – his company, FutureSimple, has a free trial offer, so it’s hard to know how much of the piece is using that as the basis for the post vs. a couple of professors he references. I disagree with the idea that a free trial is freemium so much because OfficeDrop recently made the switch from a free trial to having a free forever plan and we called it “going freemium.”

My definition of freemium is that a user will have the opportunity to use the service/software/whatever forever without having to pay for it. It may be a limited plan or limited features, it may be ad supported; whatever. It just means you can use it for as long as you’d like without paying. FreshBooks has a freemium model, but you run out of “free” pretty quickly. You can jump through hoops to keep it free, but most likely you’ll upgrade. A free trial that expires after a set number of days doesn’t meet my definition of freemium.

OfficeDrop’s free plan is driven by our mobile distribution strategy. I write a little bit about why we think apps are taking over here. But you should listen to my conversation with Lincoln – I call it “Healy Jones on Freemium.” Our free plan is a free forever plan, with some upgrade triggers baked in – search limits, storage limits, OCR limits. But it’s a pretty good product for free; we are the only company offering free high quality OCR for scanned images coupled with storage. People seem to like the plan… and they also seem to like to upgrade to paid plans. We like that part for sure!